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Tax Updates In August 2023

On Behalf of | Aug 8, 2023 | Blog |

Beneficial Owners Must be Disclosed. In accordance with the Corporate Transparency Act (CTA), on January 1, 2024, many corporations, limited liability companies, and other entities created or registered to do business in the United States must report information about their beneficial owners to FINCEN.  See, for guidance and Answers to Frequently Asked Questions.

Employee Retention Credit & Fraud.  IRS Commissioner Danny Werfel spoke to the IRS’ focus on scrutiny as to suspicious submissions and concerns against aggressive marketing.  The credit for affected businesses was limited to covering the period between March 13, 2020, and December 31, 2021.  For those who improperly claimed the credit, it may be better to come forward sooner than later to mitigate among others, penalty and interest assessments. For more, see the IRS’ recently updated the ERC frequently asked questions (FAQs) on the IRS.Gov website.

IRS Provides Info on Helping GIG Workers With Their Taxes.  The gig economy – is a more popular method of earning money for on-demand work, such as driving a car for booked rides, selling goods online, renting out property or providing other on-demand work.  This is all taxable income.  Workers should understand their classification as employees/independent contractors as well as whether estimated taxes need to be paid to avoid penalties and interest at the time of filing.  Independent contractors may be able to offset their income by expenses directly related to their earnings.   Like all things with taxes, good record keeping is a plus.  See, IRS Tax Tip 2023-85, June 27, 2023

IRS to End Unannounced Revenue Officer (“RO”) Visits–Mostly.  To reduce public confusion and increase overall safety, IRS ROs will first send an appointment letter to the taxpayer with unannounced visits occurring under unique circumstances.  The rest of the IRS collection process remains unchanged.  See, IRS Topic No. 201, The Collection Process.  Doing so is also likely with the hope of quicker case resolution.

Paperless Initiative Launched.  With Inflation Reduction Act resources, the IRS continues to incorporate new technology to automate the scanning of millions of paper returns and permitting taxpayers to respond online to more notices.  In its next phase, the IRS’ goal is to ensure that by the 2024 filing season, taxpayers are able to go paperless if they choose to do so, and by filing season 2025, the IRS will be able to digitizing all paper-filed returns when received, “eliminate up to 200 million pieces of paper annually, cut processing times in half and expedite refunds by several weeks.”  See, Tax Tip.

Identity Thieves Next Wave.  The sending of emails and text messages with the promises of tax refunds or offers to help ‘fix’ tax problems this time centering on a third round of Economic Impact Payments. The emails urge people to click on a link so they can complete their “application” and the taxpayer is taken to a website where valuable personal information is harvested. IRS news release 2023-131 speaks to other scams/schemes including: “Claim your tax refund online, Delivery service at your door, Help you fix-it text, You may be eligible for the Employee Retention Credit (ERC) claim.”  The IRS urges people to remember that id does not initiates contact by email, text or social media as to a bill or tax refund.